5 ways to get the most out of your director effectiveness reviews
Having helped dozens of organisations carry out a review of the effectiveness of individual directors, Board Benchmarking has seen the very best and the very worst ways to use the feedback.
The very best has included the Chair showing great vulnerability by sharing their full report with all other directors or summarising in their own words what others are saying in relation to their strengths and improvement suggestions.
When this occurs, the great example set by the Chair normally results in the rest of the board feeling comfortable to do the same and sum up others’ feedback on their three main contributions to the board and three main improvement suggestions. They also feel comfortable outlining the one or two main steps they plan to take to leverage their strengths and implement the suggestions for the benefit of themselves and the board.
Some of the very worst ways to deal with the feedback include simply sending the relevant directors their individual reports without discussing them or the process ever again.
We have set out below 5 ways to ensure your board achieves the very best outcome from director effectiveness reviews.
Step 1: Set the review up for success from the start
If your review is not set up for success it will almost certainly not be a success. If you take a “tick the box” approach to the review, it will almost certainly be treated accordingly.
Most good reviews of the performance and effectiveness of individual directors involve a well-designed online self and peer survey and a good engagement process once a report is shared with each director.
In Board Benchmarking’s experience, setting the review up for success includes designing a good review process and clearly communicating to directors and any executives who will be involved in the review process:
- the importance of the review, including that the improvement in the effectiveness and performance of individual directors is an important part of improving the performance and effectiveness of the whole board
- that their written comments in relation to each director will add value to the report for each director
- how the anonymity of each survey participants will be protected and if some executives are also contributing to the process, whether their ratings and comments will be included separately or together with the ratings and comments of directors. In our experience executives are more likely to share their written comments if they are told that their comments will be merged with the comments of directors
- how the report for each director is to be shared with them before the survey is commenced. Several options are available and include:
- all the reports being provided to the Chair or the Chair of the Nominations Committee to provide to and discuss with each director following the survey process. This is the most common way
- the report being sent directly to the director by the service provider and the survey provider discussing the report with the relevant director
- the report being sent directly to the director by the service provider without any follow up and without the report being seen by any other director or employee
Once the process has been set out and communicated, it is important that it be honoured.
Step 2: Use a well-designed and unobtrusive survey tool
Most directors will only want to be involved in a review if it can be done simply, efficiently, professionally and unobtrusively. Any survey needs to be designed to make it easy for directors.
Board Benchmarking has designed an online survey that enables directors to rate themselves and every other director all in one survey webpage. That same survey can also be completed by executives who know the directors sufficiently well to make informed comments in relation to each director.
A good survey will also rate directors on the most important attributes for directors to exhibit. Those attributes should be in the areas of teamwork, leadership and oversight as well as personal attributes such as reliability, ability and courage to critically and constructively challenge others, and sound commercial judgement.
Directors shouldn’t be rated on too many or too few attributes. In Board Benchmarking’s experience having directors rate themselves and others on around 14 attributes is about right.
Step 3: Provide an insightful report
The Director Effectiveness Report is more likely to be read and analysed if it is designed to be insightful. Ideally, the ratings included will show the following two main perspectives:
- A comparison of a director’s self-rating versus the average rating of the director by others and the gap. This will show the extent of the self-awareness of the director
- A comparison of the average rating of the director by others compared to the average rating of all directors by others and the gap. This will show the relative strengths and relative areas for improvement of the director relative to other directors.
The Director Effectiveness Report will also include written comments of others in relation to the director’s main contributions to the board and the main suggestions others have for that director. The comments made normally align with the ratings referred to above.
Step 4: Engage directors deeply with their own report
A good process will engage directors deeply in the ratings and gaps as well as in the comments included in their Director Effectiveness Report.
One of the best ways to do this is for the Chair or the Chair of the Nomination Committee to ask each director to consider both the ratings and the comments included in their report and summarise what they think others are saying to them in terms of their three main strengths and the three main suggestions others have for them.
The Chair should advise the director that they will do the same in relation to their report and then arrange a time to discuss the report with the director. We recommend the Chair and director compare notes on the director’s three main strengths and three main areas for improvement – and ideally what the director plans to do to leverage their strengths and address their areas for improvement.
Asking directors to consider what others are saying to them in relation to their strengths and improvement suggestions forces directors to engage with their report and to think about, analyse and summarise what others are saying to them in terms of the average ratings of them by others and the comments about them.
Step 5: Share what has been learnt and planned actions with each other
The best way to complete the individual director review process is for each director to share with each other what they have learned from the review, including others’ feedback of their main strengths and suggestions, as well as their intended actions for improvement. If a whole of board review has been done at the same time, directors should do what they can to align their intended actions with the recommended actions arising from the whole of board review.
It helps if the Chair and any Managing or Executive Directors take the lead in this process by sharing what they have learned before asking others to do the same. It also shows the Chair’s commitment to personal continuous improvement, which together with the example of other directors, also sets a great tone from the top in terms of continuous personal improvement for the CEO, the executive team and the whole organisation.
Sharing in this way also helps build much higher levels of trust, candour and rapport which is invaluable, particularly to help the directors and the board as a whole deal with its big challenges ahead.